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Challenges to changing the pension system in Kenya and Middle-Eastern Europe
Transcript of Challenges to changing the pension system in Kenya and Middle-Eastern Europe
There is no reform panacea which can be applied to all situations since each country has unique history and characteristics.
CONCLUSION The main areas of challenge in sustainability Government debt (% GDP) Public pension expenditure Demography Contribution to the pension (%) migration low levels of fertility older generations are increasing higher dependency ratio SOLUTIONS FOR SUSTAINABILITY: Financial terms has to be balanced with adequacy of pension benefits
Increased retirement age
Elaborate a plan by employers and employees
Robust pension systems
More needs to be done to make the situation more sustainable Main problems of integrity in Middle - Eastern Europe and Kenya PRIVATE PENSION: Not so common
Lack of knowledge about the system
Not adequate financial situation MANAGING OF THE PENSION SAVING: Fraud
Transparency Lack of trust Example: Investments to the III pillar among the heads of banks and pension funds in Estonia Example: Average Interest rate of return of different private pension funds in period 2001-2010 in Hungary Criminal sanctions
Better communication between the parties
More information about the process
Strict regulations SOLUTIONS FOR INTEGRITY: ADEQUACY MEASURES:
Are chosen countries able to fulfill them perfectly? POVERTY RATE IN RETIREMENT Living in poverty
At the risk of poverty NET REPLACEMENT RATE Amount of contributors & retirees
Private savings AVERAGE INCOME & PENSIONS Current pensions
Ability to pay into pensions OBSTACLES TO OVERCOME: LOW AVERAGE INCOME LOW NET REPLACEMENT RATE NO PRIVATE SAVINGS LOW INCOME IN RETIREMENT POVERTY IN RETIREMENT SOLUTIONS FOR ADEQUACY: Increase the retirement age;
Reduce benefits for early retirement;
Provide elderly with workplaces;
Give tax support for private savings;
Extend the coverage of pension for informal sector (in Kenya) Thank You For Your Kind Attention!